KAREN MIDDLETON:
Treasurer, welcome. Thanks for joining us in probably your busiest week of the year.
JIM CHALMERS:
It’s a real pleasure, Karen. Thanks for having me on the podcast.
MIDDLETON:
Very happy to have you here. Now, how big is the sleep deficit so far at the end of a big week?
CHALMERS:
Sizeable but I was just saying to a colleague from the office that I’m not going to whinge about it. The whole team has been working around the clock for some weeks now, and so looking forward to catching up.
MIDDLETON:
It’s not the end of it, though. You’ve got to get out and sell it to the public now, right?
CHALMERS:
That’s one of the things I learned in putting together budgets for other governments and other treasurers, really, is to make sure that you don’t see Tuesday night as the end of something. Tuesday night’s really the beginning.
MIDDLETON:
Indeed. Well, we’ve heard a lot since Tuesday night about the detail of the Budget, but I want to start by talking about the principles that underpin it. Now, you’ve really been caught between economic and political imperatives at this time in your first term in government, have you not? How do you describe the principles underpinning the Budget?
CHALMERS:
I know that your very informed listeners are used to reading and listening to things that say that everything a government does is done through a political lens. And so, I expect to get some feedback on what I’m about to say. But one of the things that I have found liberating is I genuinely think if you get the big parts of a budget right and you try and be very focused to people’s real lived experiences and you try and get the economics right, then the political stuff will take care of itself.
MIDDLETON:
Well, we’ve heard you say that a few times this week.
CHALMERS:
And I know that people have a view about that. I get that particular kind of political junkies and political watchers, they’ve got a view about that. I understand that. But it is genuinely liberating to try and do the economics of it right. And then I genuinely think the politics will take care of themselves if you get the economics right. And I’m confident that we have.
MIDDLETON:
It’s hard to escape the conclusion, though, that you have chosen a couple of mechanisms to try and artificially drive down inflation, encourage the Reserve Bank to lower interest rates, and do it all in time for the next federal election.
CHALMERS:
What’s artificial about it?
MIDDLETON:
It’s not going to be a permanent reduction in inflation. It’s a half a percentage point, but it’s a temporary one. So, what do you say to the cynic, the cynical view, if that’s what you think it is, about your Budget?
CHALMERS:
I do a little bit, because what we’re talking about here is helping people get their bills down. And in getting their bills down, we get inflation down. And I don’t think that there’s anything artificial about helping people with their bills. And the energy bill rebate is a one‑year thing next year. But the rent assistance is permanent. The cheaper medicines for concession holders is 5 years. There are other permanent changes in the system. It’s a mix. It’s a mix of broad cost‑of‑living help, tax cut for every taxpayer, energy bill relief for every household, and targeted whether it’s rent assistance or student debt and the like. But it’s a big, substantial cost‑of‑living package. But it’s a responsible one. And I don’t like this characterisation about it being artificial. I don’t think it’s artificial to try and help people who are doing it tough.
MIDDLETON:
You don’t think you chose a mechanism that you were confident would be able to, you would be able to, say, drive inflation down?
CHALMERS:
I’m trying to drive inflation down with our whole budget. Our whole budget is about engaging in this inflation fight. I don’t see those necessarily as 2 different things. We’re trying to make life easier for people. The thing that’s making life hard for people is this inflation challenge. When we came to office, it had 6 in front of it. It’s got a 3 in front of it now, but it’s not mission accomplished, as I keep saying, because people are still hurting, and I don’t see that through a political lens. I know from my own community, I know from engaging with communities right around Australia, people are still doing it tough, even as inflation comes off. And so, of course, the Budget is designed to ease cost‑of‑living pressures, but also to put downward pressure on inflation, and I’m confident that it will.
MIDDLETON:
You do have difficult economic circumstances at the moment, but let’s play a hypothetical, if you like. If you had an economy that was chugging along nicely, you had inflation already within the target band, you had growth a little bit stronger. And if I gave you a blank sheet of paper to design a budget, how different would that budget be to the one that you’ve designed because you’ve acknowledged that the economic circumstances have had an influence?
CHALMERS:
I think the best budget’s always taken into consideration the prevailing economic conditions. And so, every budget’s a little bit different because the economy’s always a little bit different and so it would depend on the different circumstances. But what we’ve tried to do here and in the first 2 budgets is to say, what are the pressures on people now, obviously, inflation is first and foremost, but other pressures too. We saw the labour market soften a little bit more today and there are other pressures as well.
But to try and do that in a way which is very attentive to the here and now and the prevailing conditions, without forgetting our responsibilities to the future. And one of the things I’m proudest of about this Budget, cost of living at the front end, where those pressures are most acute, but a big long‑term vision, long term agenda for the renewable energy superpower and the Future Made in Australia, and all of those agendas which will deliver into the future.
MIDDLETON:
I want to come back and ask you about those. There are some of your traditional constituents, maybe in the community sector, for example, who were disappointed now, maybe their expectations were raised too high, but they are saying this is a missed opportunity. What are you saying to the people who say it’s not enough reform, it’s a missed opportunity?
CHALMERS:
First of all, I mean, I understand their point of view and I deal with the sectors and the peak organisations in a respectful way. I appreciate their view and I know it’s not my first rodeo. I know that some people would like us to spend less in some of these areas and some people would like us to spend more. In their job, which I respect is to do the best they can for the people they represent, the same way that mine is. We increased JobSeeker, for example, by $40 a fortnight in a permanent way in the last budget. In this Budget we lean more heavily on rent assistance and energy rebates and cheaper medicines and some other changes to JobSeeker, and I acknowledge that that’s short of what a lot of people were calling for. That’s not unusual or unprecedented in the aftermath of a budget, and I don’t mean to be disrespectful about that or dismissive about that. I genuinely think that the peak organisations play a very valuable role. And what I would say to them is we always try and do the best that we can, the most that we can, conscious of all the other constraints that we have on us. And I’d also say, as important as JobSeeker is, and as proud that we are, that we increased it by $40 a fortnight in the last budget, there are other ways to help people who are vulnerable or on low and fixed incomes.
MIDDLETON:
You’ve been asked about JobSeeker a few times and you gave your National Press Club address and in fact my colleague Paul Karp asked you a question about JobSeeker, and his question really, I’m not sure that he got an answer, so I’m going to have another crack. But he was making the point that when are the economic circumstances going to be right to have another rise in JobSeeker? Because your own anti‑poverty advisory committee, led by Jenny Macklin has recommended it. Steven Kennedy is on that committee. They said it’s absolutely essential, urgent, and you’ve said we can’t do everything all at once. But what economic conditions would provide the opportunity to do that, given how important that committee has said it is?
CHALMERS:
As much as I respect Paul’s ongoing interest in this, one of the things that is sometimes missing is recognition that we have raised the rate in our time in office. And I know people would like more than $40 a fortnight, but that’s not an insignificant part of the last budget that we handed down. And so, it’s partly about economic conditions, partly about fiscal constraints, it’s also about working out the best way that we can help people. And I take that Economic Inclusion Advisory Committee very seriously.
We have been working our way through a whole bunch of the recommendations. There’s more than one recommendation in those EIAC reports. I go to those meetings, sometimes I present to those meetings, I read very carefully every word of their reports. I’ve written in detail back to give a progress report on the things that we’re implementing from that. But I mean it when I say it’s not been possible for us to take the whole report and implement it immediately. And that’s not because of an absence of goodwill or an absence of understanding. It’s just trying to make everything add up. And there’s lots and lots and lots that we’re doing for people who are on low and fixed incomes, vulnerable people, including in the Budget we handed down on Tuesday night.
MIDDLETON:
One thing you’re doing for everybody is the energy rebate, $300. Now, we’ve talked a little bit about the parameters about that through the week, but how did you arrive at $300? I think the pensioner rebate when they got it, the first version was $500. You’re now at $300, it’s going to more people. But how did you get to that figure?
CHALMERS:
Well, first of all, the $500 last time was 50/50 with the states. And what the states made pretty clear was that they wanted to do different things. So, the Queenslanders had a much bigger sum in mind, WA had a different way of doing it. Some of the other states might do it in their budgets. And as we consulted with them, we determined that we would do our bit and they would decide how they would do their bit. And so, the Commonwealth contribution is bigger this time rather than smaller this time. And you’re right to say that it applies to a broader cohort of people.
Once we worked out that we wanted to provide some of the cost‑of‑living help in a broad way – tax cuts for every taxpayer, energy bill relief for every household, some of it targeted rent assistance, medicines, student debt – once you work that out, you try and work out what do we think is the right and responsible total amount of spending. In this case, about $3.5 billion, conscious of a whole range of economic and fiscal considerations. And so, like everything, like every new policy in any budget, you try and strike the right balance between doing the most you can in the most responsible way.
MIDDLETON:
You’ve had a bit of a caning this week from people saying it’s too generous to too many people and people at the top end shouldn’t be getting it. Now, some of that’s coming from your political opponents. You might expect it. Is the negative response more than you expected?
CHALMERS:
No. And again, you know, I don’t want to be dismissive of the feedback you get after a budget. But it is factually the case that after every single budget, no matter who hands it down, there’s a lot of people who don’t agree with elements of it. That’s a good thing about our country. And there’ll be people who respond to this podcast, some will have a similar view to me, a lot of people have a different view to me. I’m generally and genuinely pretty relaxed about that. We wanted to provide it broadly because we think that people in middle Australia are hurting as well. And once you go beyond providing it to pensioners and people on payments, because the energy retailers where we deliver this help through, they have that information about people. They know if someone’s on Social Security payments, but they don’t have the income information. And so, what we didn’t want to do was take a long time and spend a lot of money devising a whole new data sharing agreement between the ATO and the energy retailers, and setting a new means test, which may in the end have been more expensive than some of the help that we’re providing to people who are doing okay.
MIDDLETON:
I get the impression you’re pretty happy to be able to say it’s for everybody, though.
CHALMERS:
I think it’s an important part of the design of it. One of the things we’re very conscious of is that these cost‑of‑living pressures don’t stop at a certain income level. Obviously, some people are better able to accommodate those cost‑of‑living pressures. And obviously, as a Labor government, our highest priority is on people on the lowest incomes. That’s why we changed the tax cuts, or one of the reasons why is because we recognise if you’re providing support, you need to be attentive to the people who are struggling the most. But there are a lot of people in middle Australia who are struggling too, and we didn’t want to leave them out.
MIDDLETON:
I’d like to talk about the Future Made in Australia project. I think there are still a lot of people who are saying, ‘I don’t understand what this thing is’. Can you explain it in a couple of sentences?
CHALMERS:
Yes. So, Future Made in Australia is about making the most of the vast industrial and economic opportunities which come from the world moving to net zero. And in that, Australia’s got these huge advantages in our industrial base, our energy base, our resources base, our human capital base, our people, and our attractiveness as an investment destination. And so, we want to make ourselves indispensable to the way the world is changing, particularly in the context of the global net zero transformation. And that means making sure that our industrial base keeps up with that change so that our people benefit from it.
And I think I said at the speech that you referenced before in the Q&A, really our primary motivation here is to recognise how the world’s changing and the pace of that change is accelerating. And we want to make our people benefit from that rather than lose out from that. And a Future Made in Australia is the policy architecture that makes that possible.
MIDDLETON:
You’ve emphasised the net zero transition and that that’s the key reason why you’ve set this structure up. The Budget put a bit more meat on the bones, and it talks about 2 particularly big pots of money for critical minerals development and for hydrogen development. How does underpinning critical minerals development connect to net zero?
CHALMERS:
Because critical minerals are the crucial component, whether it’s batteries or other technology, which will help us get to net zero. And Australia’s got a remarkable opportunity there. We want to make the most of it. You know, we have a chance to mine it, which is part of the story, but we want to make sure that we are doing more of the refining and more of the processing here. It’s a golden opportunity, an opportunity of the century, really, critical minerals for Australia. But not the only opportunity. Renewable hydrogen is pretty well advanced as well. And so those are the 2 standout opportunities that we are trying to attract more private investment into, because we think that they will be areas which will be good earners for the country and provide good, secure, well‑paid jobs into the future.
MIDDLETON:
It’s also about supply chains, isn’t it, and being self‑sustaining. And that, in the end, isn’t that a bit about China and making sure we don’t have to rely on another country like China for those things?
CHALMERS:
Yes, it’s definitely about supply chains, and it’s definitely about making supply chains more reliable and more resilient. And there are, to be upfront about it, there are some supply chains which are too dependent on one supplier. You know, solar panels out of China are a good example of that. But we’re being realistic about it. We’re not saying you have to make everything here; we’re not pretending that you can do every element of producing every element here. That’s obviously unrealistic. We’re working out where can we be an indispensable part of this energy transformation. There are some obvious areas and there are some other areas that warrant further consideration. And that’s about recognising what our advantages genuinely are and making sure that we are playing a role in the world and creating good jobs at home.
MIDDLETON:
It looks like there’s something like $40 million in there for what looks like an advertising campaign. Now, you’re not actually asking Australians to do anything. You’ve just given us an explanation of what this is. So, why do we have to pay to have another don’t you do that for free.
CHALMERS:
We make a sensible provision when it’s a big policy change. This is a big, ambitious vision for the future and it’s not unusual under governments of either political persuasion to make a provision for consultation or communication. And that’s what we’ve done here. Some of these changes that we are contemplating are big, meaty changes. We’re talking about, over time, transforming our energy base, transforming our industrial base, our human capital base. And so, it’s not, I think, unreasonable or unusual to provision in a responsible way to communicate that to people, partly so they understand where things are headed, so that they can plan accordingly, but also because change can sometimes create anxiety and we want to avoid that at all costs.
MIDDLETON:
I know we haven’t got you for too much longer because the bells are ringing and it’s a busy day in Parliament, but I want to come back to something you talked about earlier and you talked about how people are feeling. And it strikes me that it’s an eternal frustration for governments that they give people help, but they don’t really feel like they get a lot of credit for it. And people don’t necessarily. They might be financially better off on paper, but they don’t feel better. How do you deal with that in this environment? Because you obviously can’t just keep giving people money. How do you make people feel better?
CHALMERS:
Our job is to do what we can to ease some of the pressure they’re under. The anxiety that people feel is a genuine feeling about genuine pressure. We have been through and are going through still a spike in inflation, which is very, very hard for people to accommodate in their household budgets. And even though we’ve made really quite substantial progress since we came to office, inflation had a 6 in front of it when we came to office. It’s got a 3 in front of it now, and we need to get it lower. We need to recognise that even that terrific progress that we’ve made collectively as a country to get on top of this inflation challenge. It’s not over yet. People are still under pressure and that’s what’s creating that anxiety.
Our job is to try and deal with the sources of that. And my job is to help deal with the source – the financial, the economic sources of that anxiety, whether it’s in the near term, rents, energy bills, the cost of living, supermarkets and groceries, and competition in the near term. But also, what we try and do, and what I try and do personally, is to give people a sense of where the show is headed. And we just spoke about the Future Made in Australia, but to reassure people that there’s help in the here and now. But we also broadly know what the future looks like, and we’re not waiting until it’s too late to position our country for people to be the beneficiaries of that change, because often it’s change that creates that anxiety.
MIDDLETON:
Well, the global circumstances are creating anxiety, too. And we know confidence is a big thing in the economy. We know people aren’t spending their money. That tells us they’re nervous. How do you, aside from just making them feel better, how do you instil confidence in the economy broadly?
CHALMERS:
And the reason I think that’s a wonderful question is because, and you referred earlier to the kind of free advice that you get as a government when you’re putting a budget together. You know, there’s been more than the usual amount of commentary this time about how we need to run much sharper spending cuts and a much sharper, what the jargon describes as a fiscal contraction and all that sort of stuff. And I look at the economy and I see a labour market, which is softening and people who are under pressure. Consumption is flat, retail is flat, growth was flat at the end of last year.
And so, the reason I’ve taken an approach, which is to fight inflation as the primary objective, but also to try and do that in a way that doesn’t smash people or doesn’t smash the economy. I think that’s really important because people are anxious about what’s happening around the world and what’s happening around the kitchen table. To turn on the news or to read the Guardian is to read stories about tensions in the Middle East or tensions closer to home or the Russian war in Ukraine.
And when I go to meetings with my G20 colleagues and counterparts, the main topic of conversation is the impact of all of this geopolitical tension on our own economies. And so my job is to deal with what I can of that anxiety in the near term and in the longer term, and to try and explain to people like we are here what kinds of things we’re grappling with as a country, but also as a government.
MIDDLETON:
And people are pretty economically literate these days. They will rigorously examine your Budget. If you don’t get the result you’re looking for. And I guess it’ll take a little while to tell, but if you haven’t achieved what you want to, what happens next? You’ve got a mid‑year budget update at the end of the year. Do we then see an early budget next year? What if this reduction in inflation doesn’t come to pass? If the forces overseas are more volatile than we expect, what then?
CHALMERS:
Well, we keep our budget position and our economic policy constantly under review. That’s not unusual either. To make sure, as we said at the very start of this conversation, that our economic policy matches the economic conditions. And so if they evolve in ways that are not consistent with our expectations right now, then we obviously, in budgets, have to recalibrate that.
In terms of whether or not there’s another budget at the start of next year. You know, I’m anticipating there will be. Katy Gallagher and I will be ready to do that. But at the end of the day, the Prime Minister has said he wants to go full term. That’s our working assumption. But at the end of the day, it’s up to the Prime Minister. I know what my job is here, and my job is not to decide the timing of elections. So, that’s up to him. I’ll be ready to go whenever he wants us to do it. But I’m assuming that there’ll be a fourth Budget in the first term of the government.
MIDDLETON:
You’ve got a bit of shoe leather to wear out between now and then, I reckon.
CHALMERS:
Yes.
MIDDLETON:
Treasurer, thanks very much for joining us today.
CHALMERS:
Thanks so much, Karen. Really enjoyed it. Thank you.
MIDDLETON:
Appreciate it.